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There are socially beneficial reasons for the creation of tax incentives surrounding qualified retirement plans. If you see a long history of tax benefits being afforded to a particular behavior or asset, this is generally because Congress believes that the behavior or asset provides some economic benefit to society as a whole. We will revisit additional tax benefits for investments later in this Lesson and in Lesson #8. In the case of retirement vehicles, the theory is that by encouraging people to fund their own retirement, the government (and the rest of us taxpayers) will not have to support them in retirement.
Two retirement tactics for Doctors to consider are:
1. Maximizing available qualified retirement plan contributions for all members of the family.
2. Maximizing investments in vehicles that are similar to qualified retirement plans for all members of the family.
As you learned in Lesson #1, Doctors must Leverage assets, capital and advisors if they want to work less and build more. By creating separate business entities to own real estate, equipment and liquid assets, Doctors are able to create employment opportunities for members of their family. By creating income opportunities for family members, you can accomplish two things:
1. Generate effective wealth transfers to junior generations.
2. Create opportunities for such family members to make tax-deductible contributions to their own retirement plans.

MA photo by Mikael Kristenson. unsplash.com/photos/3f4sQIums6kaximizing The Use of Qualified Plans
Since tax deductible retirement plan contributions are limited for each person, having additional family members earning income within a family business or practice allows multiple tax-deductible contributions. This technique reduces the total tax liability for the family. In an earlier Lesson, you learned that qualified retirement plans were afforded the highest level of protection from creditors (+5). The use of multiple contributions also affords physician families greater level of asset protection for their total wealth, as more money will be invested into this exempt asset class. In addition to the reduced taxes and increased family savings, this strategy helps protect those savings from lawsuits (see Lessons #5 and #6). All of these benefits are integral for long term, sustainable affluence. There are many types of tax-deductible retirement vehicles. They fall into one of two cat-egories: defined contribution plans or defined benefit plans. Defined contribution plans restrict the amount you can contribute to the plans on an annual basis. These include all forms of IRAs (individual retirement accounts), profit sharing plans, money purchase plans, 401(k) plans, and others. Defined benefit plans restrict how much can be in the plan at any time. The broader category of defined benefit plans includes fully insured defined benefit plans which are also known as 412(i) plans. Typically, defined benefit plans are used to help older individuals catch up on lost contributions.
The choice and implementation of the right plan for the situation will be determined by your planning team. The benefits of that planning will vary widely depending on each family’s circumstances and the ages and salaries of the employees.

Maximize The Use Of Vehicles Similar To Qualified Plans
Another tactic Doctors should employ is to use tools and techniques that mirror many of the benefits of retirement plans. Since retirement plan contributions are limited, Doctors need to utilize alternative saving and investment methods to meet their significantly higher long-term retirement needs. A common strategy to enhance long-term retirement income and reduce taxes on investment gains is to invest in cash value life insurance. This will be discussed in detail in Lesson #8 where we discuss how certain investments offer important benefits to Doctors. If you want to maximize long term, tax-efficient retirement income, you should definitely take time to review Lesson #8.

The Diagnosis
Retirement plans are a great way to achieve a high level of asset protection, while reducing cur-rent tax liabilities. In addition, the use of vehicles like cash value life insurance policies can help Doctors avoid taxes on investment gains and enhance retirement income while protecting assets from lawsuits all at the same time. Other vehicles, like Family Limited Partnerships and Limited Liability Companies, can also offer tax benefits. These are discussed in the next chapter.